Are your financial books dirty, or are they clean and organized? Chances are you are abdicating your business’s financial responsibilities. The big myth around doing accounting for your business is that it has to be hard and confusing. Instead of giving all of your power away to your CPA, you should be partners with them.
Knowing where your cash is flowing is the greatest way to know where you are needlessly spending. With that extra money, you could do something such as hiring an assistant. Discover how to better support yourself so you can better support your business. Your books tell a story– and we talk about how to reframe those narratives to the affirmative.
Mercedes Gomez is a Wealthy Wellthy Certified Money Coach. She is a CPA based in Florida and serves clients across the world. Mercedes is originally from Lima, Peru and now lives in Boca Raton, Florida. She has Bachelors and Masters Degrees in Accounting. After 10 years of working in various accounting and consulting jobs across private and public companies, Mercedes decided to quit the comfort of a paycheck and start her own company in an effort to reconnect with true passion and mental health.
Some of the topics you will learn about:
- What are Dirty Books?
- Why Organized Books Are Key
- What The Common Mistakes Are
- Do Your Books Give You Anxiety?
- Finding a CPA
- Why Abdicating Your Finances Is Not The Answer
- How To Find Money Left On The Table
- Gamifying Your Finances
- Learning Where To Cut Costs
- Income Statements
- Cost Of Services Sold
- Operational Services
- Net Income Or Net Loss
- Balance Sheets
- Wise Money Bookkeeping & Consulting
Enjoy This Episode With Mercedes Gomez!
This transcription was made by using Otter.ai so it is not 100% accurate.
Krisstina Wise [0:00]
Hi and welcome back. In this episode I interview Mercedes Gomez. Mercedes is an Uber talented CPA that I get the privilege of working with on a regular basis. She has a bachelor’s and master’s of accounting and has a wide spectrum of accounting experience and wisdom. Having worked with both big four accounting firms representing some of the largest companies in the world, and she’s worked with a small business owner, she discovered that her love and passion is to help the entrepreneur and micro business owner as she says it’s a lot more fulfilling and a lot of fun to work directly with the owner. I was lucky enough to be introduced to Mercedes and since I’m proud to say she is a certified why’s money Coach. In this conversation, Mercedes shares the biggest mistakes business owners make when it comes to their books and what to do to avoid these costly errors. We discuss dirty books and the basics of understanding your financial statements. If you think that sounds boring, think again, not having this understanding is one of the fatal flaws of loss of profit, not to mention, learning the money basics is very exciting. Mercedes also shares what to look for in your numbers in order to build a bigger, better and more profitable business. And make sure to listen to the very end of this one. I make a big announcement in this episode. So if you’re one that advocates their books and or doesn’t have a good grasp on how your money flows, accounting wise in your business you’ll wish to listen in, I promise you will learn a lot. And stick to the end again to hear the announcement that I’m super excited to tell you about. Please enjoy my conversation with Mercedes Gomez. Mercedes, welcome to welcome wealthy podcast. This is so long overdue. Good morning.
Mercedes Gomez [1:39]
Good morning, Krisstina. I’m super happy to be here. very honored to be talking to you and in the podcast.
Krisstina Wise [1:47]
All right. Well, I think what we’re going to talk about can be so valuable. And just a little bit before we get started. Just share with everyone kind of who you are and a little backstory, you are a CPA, and you’re in the money business. So we’ll be talking a lot more about that. But yeah, tell a little bit of story what brought you to this place in your journey?
Mercedes Gomez [2:10]
Sure. Um, well, I was born in racing, Peru in Lima. And I am I was exposed to my parents business growing up, they had a pharmacy and a hotel. And I just loved the freedom that their business afforded. I got to spend a lot of time with them growing up and, and my sisters, so I’m a later in my teenage years. My sister migrated to the States. And she’s like, Come Come with me. Come make company. And I also am so I got a scholarship to college in Florida. So I, I moved to Florida for my, a bachelor’s and master’s. And while I was in college, I started working my first accounting jobs, like doing bookkeeping for local business, a family business, and then getting an internship at a local CPA firm. After I graduated, with my Master’s in accounting, I was ready to get to start playing in the big leagues and really go into corporate America. So I took a job at one of the big four as an audit consultant. And it was an amazing experience I got to I got to work with in management and accounting teams in top performing companies in South Florida. And while it was an eye opening experience, I get to see what worked and what didn’t work. And some time later, I was really making my best effort to move up on the corporate ladder. And unfortunately, I I put my health not only physical, but also mental health on the line. And after my first anxiety attack, I just got like, I just knew that I had to keep moving in my career. So I transition into an audit role. And I’m in a hospital. And this is what I love about accounting a really accounting allows you to see operations across a business in and really learn the industry inside out. So while I was at the hospital, I get to see a hospital operations from a from gift shop operations to pharmacy subsidies to physician contracts, in occupancy rates and how to improve them and everything in between. And that was a really a great experience for me and I stayed for a few years there. And, and something happened a actually, unfortunately, in my two people in my team were passed away within the same year. And that was very a touching for me, these were people that I was very, that I was working on with on a daily basis. And I really respected them as professionals, they, they had an amazing work ethic. And as I was, as I met with, with their families and
and get to know them better, I realized that there had that where that seed was planted, where I wanted to search for that balance, where health and wealth would be combined, where we can be successful in our careers, but we can also take good care of our of our lives. And permanently, I also was starting to learn about yoga and being more spiritual and taking care of my own body. And so the oldest experiences around me were starting to shape in who I am today. And so after, after a little bit at the hospital, I ended up taking a role at a local consulting firm. And going deeper into that, a work one on one with clients, where I was helping them implement accounting, in accounting processes and accounting systems. And in this, in this job I had, I was lucky to work with these small equity firm that was owned by two families. And they seem to really have it a to have striking a balance in they had that balance between work and play. And I was like how, like, what is my purpose here? What’s my what is the service that I can provide. And I was able to see how getting them organized. And having them being able to print reliable reports, being able to have reliable information to make decisions was the best way that I felt fulfilled. And they were able to continue moving forward growing into what they’ve already created. So after a few years there, I decided to start my own company. And I was working with clients. And I was working with clients. And as I was getting them organized on their business books. I knew there was something missing, but I wasn’t sure what it was. So I at that same time, I was going deeper into the health A into the yoga world in an industry and starting to get to know more of that practice of yoga and the business of yoga, and started learning more about these practitioners that are great at what they do. But they don’t bring on necessarily have the business savvy, or the personal finance structure that they needed to, to run their own financing with these type of entrepreneurs, and solo entrepreneurs, or micro businesses, they usually have a great service that they can provide. But there is a there is that bridge that needs to be crossed between personal finance and business. And so a mother me my universe had its disposition. And I was introduced to you, my boyfriend learn about you and he and he had been talking to me about how we’ve how the issues that I was seeing in my clients and he’s thought it would be a good it would be a good compatibility between you and I to get to know each other. So I reached out, I started learning more about wealthy wealthy, and I loved it. I said this is that the one tool I needed to add to my services. And as I went through them through that coaching certification, and I started learning more about it and working with some of wealthy wealthy clients and implementing these with my previous clients. I started seeing how providing that service of education, a education and reporting and talking to clients and taking time to To answer their questions in a conscious way, really allow me to provide a fulfilling service. And I need to bring in an incredible journey in the last year, I’ve seen so many entrepreneurs grow and learn, and the questions that they were asking at the beginning of our journey towards the questions that are asking now, they’re just thinking much bigger. And this has been beautiful to see. And that’s how I got here.
Krisstina Wise [10:29]
Your eye that is such a great story. You know, and I love so much I just love your passion and your, your desire for this balance between these two. And that’s when I talked to Eric, your boyfriend, and he was saying, Oh, my God, you know, Mercedes is the same thing. She’s working on wealthy wealthy. And so it was, it was a beautiful introduction. And we share a lot in the past, like many people, what they don’t know is I actually went to college accounting and finance and at the time, it was a big eight. So I worked there for a while. And I do have an accounting background, I just took a I went more the business route versus the pursuing accounting. But on that note, you said so many things. And the first thing I went to do that you said was when you’re working in all these different, even if it was with big corporation, like within auditing or the hospital, or the private equity firm, or even with your your one on one clients, and and that where I see small, especially the micro business owners that you and I do a lot of work with is that they don’t understand they’re afraid of the accounting, and they think it’s really hard, they abdicated to CPAs and all these financial people without understanding that the money like the way it’s the its narrative, the way the money’s in the books, and what’s happening is complete narrative and story, that by virtue of learning how to kind of read your financials and look at these and organize them a certain way. That’s a huge part of ultimate business financial success, but it’s it’s an a missing awareness. Can you share more about that? Like, what are some of the biggest mistakes that you see small business owners making? And what are they not seeing by virtue of not just being in some of their financial reports?
Mercedes Gomez [12:22]
Oh, sure, I completely agree with you. That’s what we see all the time. And one of the biggest things is because they are not looking at it, they did. They have what they what we call dirty books, they which is accounting records that either need to be cleaned up and organized or don’t exist all together. So these a like anything that we don’t face creates so much stress. It’s unnecessary stress in any it also makes that the business owner susceptible to opportunities of embezzlement because there might be an opportunity to misappropriate funds within the company, or even there it also opens an opportunity for potential fraud, maybe furling charges on their cards that they are not following up close me also, they end up leaving money on the table because they missed opportunities to cut cost in take advantage of both discounts if they’re having a recurring expenses on with a specific vendor, they won’t be able to know if they’re not tracking their month to month operations on that closely manner. And some some other things about dirty bugs Is that him like I said, if we’re missing on those expenses, over time, those expenses can really shrink our profits. And and that’s very common. And and now as this conversation is so timely because most people are have just submitted their tax returns for for the Apollo 15 deadline or they are preparing to submit their tax their individual returns. So Around this time, business owners that have not been having a follow up on their expense of their accounting, they are just scrambling to get organized and it creates unnecessary stress and it also ends up costing them a way more expensive because a tax expert around this time is going to he’s going to charge way more a for their time. And also it’s going to have to work around the clock for you. So that’s really what in what getting organized a will will track will try to accomplish a reducing stress and and getting rid of unnecessary Sorry expenses. Also, when we’re looking at books, I realized that him, like I said, business owners are are looking at their books, only around the time that they need to do something, to submit something, not only with the IRS, but also if they’re planning for a bank loan, or they are getting funding from us exterior partner, that’s when they come to us and say, Oh, I need to get my books organized. So I’m able to provide something to this potential investor. And that’s not and that’s not a good time to be looking at the books. When and I this is a quote that I I then I love that is that when you fail to plan you’re planning to fail. So if business owners are not looking at their books on a in advance, they won’t be able to know how to talk about their books, and what is the current standing of their company. With all that, it also generates overspending. And, and sometimes, and if if owners don’t know how much they’re actually spending on a particular product or service they’re providing, they might end up underpricing that service or product. And so I they realized that, oh my god, this is amazing, we were making so many sales. But at the end of the period of the quarter, a month or a year, they realize they haven’t really kept much cash. And it’s because a they haven’t been tracking those expenses, and they haven’t been pricing their, their services or products properly. Um, another another item is that when your books are clean, you understand them. And also, you can assign an each person in your team as specific account in your financial statement. So this is this allows business owners to a to have their team members take accountability for their work. So an example of that would be
if you are getting, you’re getting great sales, however, your customers are not paying on time. So you want to assign a team member or have a task assign where the team member is responsible for making sure accounts receivable is taken care of for and because in any, if the books are not organized, and the books are not a clean the you won’t be able to really track how that employee or team member is doing over time how well they are improving, or how how they are not. So this this is an example of how we can really provide a value to business owners in daily operations. Another example would be that in the BB since owners are not hiring knowledgeable professionals to handle their bookkeeping, accounting or tax and, or even legal services. It’s It’s so funny, and I I I unfortunately, I’ve heard more than once where clients have come to me and told me that their CPA told them that they made too much money. And I am like, what are they suggesting that they do that you make less money, like, the idea is that we continue to grow and we support each other and not that we tell our clients not to make more money. That just seems outrageous to me. And I I often tell tell those clients that if the CPA is telling you that is because they don’t know how to do their job, they don’t know how to manage their a bookkeeping or a or they are not tax experts. And a tax expert should be able to sit down with you and give you the time of day and plan with you accordingly ahead of time. So you don’t have to have these a a absurd tax bills as a two weeks before filing. So m and n that’s another item and And lastly, another thing I see with business owners is that they’ve been a few years in in the business, and they’ve been half an operating agreement. They hadn’t come to a consensus on how to run the company. So they might be keep going in circles about making certain decisions about their operations. Em, and at the same time, if they are not having a their books, and if they are not keeping an eye close to their books, that’s also generating a unnecessarily spute within company owners.
Krisstina Wise [20:18]
Managers are also good, you. They’re all can be at the, at the end of the day, they all affect the bottom line, which means some business owners are not making as much money as they can? Or could there’s a few things I’ve wished to, to dive in a little, you know, a little bit more is really the idea. What would you say to again, you know, since so many people we work with are micro business owners, or their small small business owners. And they really have this mentality of I’m not good with numbers, I just want to make the money, I don’t want to attract the money. It really does have indication that my CPA knows or bookkeeper knows more than I do. But what would like what is that doing to them? I mean, is it what I mean? What do you say? I guess Let me try to rephrase that. I think that there’s this mindset that this is harder than it really is, would you agree that there’s different You don’t have to be a CPA, we don’t have to abdicate these things that really tracking the money. Looking at these looking at this being in the money is something as a business owner, we want to do because the business all is is all about making money. And how we pay ourselves is how much money of that money we make that we keep. So how do we do that really well, if we’re not in the books? And so share a little bit about what might, from your opinion, what might encourage a small business owner to want to be more into their books and to to engage with somebody that wants to be a partner with them? And I’ll let you answer just let me say one more thing is that because what we teach what I teach, and what I do, is that the CPA and my bookkeeper are partners, they’re their financial partner in a way, but I’m the decision maker, I’m the one that’s looking at the money, it’s my money is the business. Now my CPA and bookkeeper know, things that I don’t know, and there’s help there. But we wouldn’t want to give in my opinion, we want we don’t want to give all of the financial part of our business away to take care of no mother, and we’d want to give all of the parental duties to the babysitter. Yeah, or, you know, and or the nanny like, no, it’s our child. I mean, I have that now, there’s help and great nannies versus not so great nannies. And that’s awesome. But we don’t advocate parenting, we don’t want to advocate the parenting of our books. Would you have one? Would you agree with that? And then two, what would you say that couldn’t inspire a business owner to say, hey, I want to take more on this myself, you know, by myself.
Mercedes Gomez [22:52]
And so, so I mean, you I completely agree with you, um, you know, as a business owner, where you want to take your company, and it’s your vision is your mission, and we as accountants CPAs, we help you get where you want to go. And with my knowledge, and with my tools, I’m able to get you there. But if I don’t know exactly where you want to go, or if I don’t sit down with you and look at your books, and I’m I have an understanding of how our business works based on all the clients I’ve seen in the last 10 years of experience, or the experience that I’ve had. But by looking at your books, you have a much better understanding of what’s happening, minute, minute minute, and where you want to see your company grow, perhaps you know that you are going to be getting money in the future and you want to start growing a strong foundation so that you can manage that money properly. That I don’t know, unless you talk to me and communicate those things. So it’s really, like you said, a partnership with your different professionals and the importance of having like a strong foundation, which is really making sure that your books are organized and ease that it all stems from there. Once you have that foundation, your books are organized, then the next thing is I mean we work with business owners on getting them educated and it’s really powerful and empowering. When business owners come back and say I really want to a decrease my expenses by by 10%. And I know we can do it and I know how we’re gonna do it. And it’s I mean, you see the light in their eyes is it’s beautiful when when they are able to know what talk about percentages, talk about numbers and feel comfortable with what they need to do, what actions do they need to take to move those numbers up or down? Depending on what their goals are. And that’s really in an in, in addition to that having a having work with a business owners, and I wouldn’t guess a like anything we don’t know, we’re always scared to get to step towards it. But that’s the idea of having a team and working with a consultant and provider that gives you that, like I said, that time of day gives you that time to sit down and understand, just like you understand your business, because you’ve been working at it for so long. And this is for any business owners, they know their product and service so well that they can talk about it in their sleep. So the idea is that you get to meet with your provider on a regular basis, so that you start understanding how these moves, how these books are moving, and what is it that you’re doing on them on a regular basis to impact them. And, and it’s, it’s really also rewarding for the business owner to know that this decision that they made today has increased their cash flow a 50% in the last quarter. And that’s, that’s beautiful when the education also a meet the, the the action that they are taking. Yeah,
Krisstina Wise [26:32]
well said and let’s discuss a little bit like when because I see so much as the practices if a small business owner has a bookkeeper slash CPA, what they’re doing is the bookkeepers doing all the you know, the business owner really isn’t in the books at all. This is what I see regularly what you and I say, but before they start curbs and curbs for business but so they’re they’re not in their books whatsoever. Obviously they’re focused on making money, the this the bookkeepers, doing all the reconciliation and doing everything and putting everything in the place. There’s a mad dash towards the end for the CPA and taxes like you said, to get all that done and the stress and everything at the last minute, the the bookkeeper or CPA depending what that relationship is runs maybe a p&l once a month and the book in the business owner may look at it. And they’re like, Oh, great, there’s some profit there nice. But that’s really the gist of it. That’s how much these small business owners are in their books. And that’s assuming they do have a CPA and a bookkeeper, that’s even helping them there. But then the day, you’re just taking the report that’s been given it and looking at it like it’s like, Okay, and then going on about, you know, business again. So I think what what, you know, many small business owners don’t realize is that by virtue of doing that there’s just so much data and information about their business resting inside those reports that’s just not shown in this overall pulled, you know, p&l out of out of
Mercedes Gomez [28:03]
Krisstina Wise [28:05]
So what are some things like some things, for example, that that a business owner might see is like, Whoa, when I really look at my payroll, and I know these percentages, I’m way I’m way over spending, maybe in payroll, or I’m not getting the return out of payroll that I, I may need now that I’m going in, and every month, I’m seeing all that money going out or, or Wow, I you know, I just all those subscription fees on technology, I didn’t know I was paying for the same thing over and over. It’s a team member, just order something. And now, when it just shows on the p&l is something in technology, but I’m not looking at the sub items underneath these mat, more master categories. were missing because everything’s just in kind of these more larger categories. We’re not looking at the sub underneath that which means there’s so much overspending I think, when we think of overspending many times is like oh, maybe I’m buying too much stuff like no the overspending send the details, it’s in these little micro expenses that we’re not paying attention to. So what do you see when you’re seeing some dirty books? And now, you know, we have a curb student that goes through and they’re getting very clean with their money? What are some of these types of things that you’re seeing that the business owner now sees that they’re in the books that they couldn’t see before?
Mercedes Gomez [29:18]
Yeah, I really. I mean, yes, you’re completely right. With the with the reports, we have that three main reports that are taught in accounting that everybody should look at that income statement, balance sheet and statement of cash flows. Most people don’t even know what’s the statement of cash flows, because they won’t even go they won’t even get a copy of that they’ll mostly get a copy of an income statement. And if they’re if they want more information that CBA or the accountant might be to VC to provide that to them. They’ll send they’ll send a someone else who might not Provide a who might not be able to discuss information just to provide them the report. So I’m really when, when I, when I work with with clients, I encourage them to learn to a not only a read, learn to read their their statements, but also learn to a, in extracting them constructed themselves. So it’s something that they can continue to look at, if I’m not there if like on a daily basis or in a weekly basis. So depending on how it like how they want to track, and each, it almost becomes a game, if they really see the value of it, a where they are able to track their income and and their expenses and how they’re growing assets within their own company. So having said that many times, what happens is that a client is started looking at their statements, and we go into the detail and they’re like, Oh, I didn’t know I was paying that. Or they they assume thinking, Oh, but if I cut off the scars, I can actually afford to hire someone with better expertise within their business. And they realize that they’re a business owners a, at least the ones that I’ve had experience with, some of them realize that they are really good at selling their product or service. And they need someone in house to be supporting those sales and be providing that, but they they might be hiring third party services. As they are looking at their expenses and began to cut costs, they realize they actually have the budget to bring someone in house and work for them and support them full time relief stress from them, and actually allowing them to have more time to go out of the company and get more sales done, and continue to grow the business that way. But that wouldn’t happen unless they had come within within the company and actually looked at their books, and see where all their money’s going to.
Krisstina Wise [32:12]
Yeah, I love that. That reminds me actually one of our recent students, she cuts so much cost that she even know virtue of what we’re talking about. She just wasn’t paying attention. When she started going in and looking at this. She said, Christina, I found a whole salary, I can actually hire an assistant now. And I mean, so it’s just transferring that money for plate things that was wasted because I wasn’t paying attention to now I have the support. And then she just recently reported My business is growing 50% in the last three months, just because I had the help, and I wasn’t just struggling all the time. So that’s a really great, I mean, you’re exactly right on it’s just all these discoveries that are that are invisible, if we’re not actually just getting in looking at some pretty simple numbers. Yeah. So very quickly, you go ahead.
Mercedes Gomez [33:01]
Another thing I wanted to mention is that I have mentioned that, that the accounting Team A or it the the lawyers, the CPAs, the the bookkeepers, they are all supporting your goals. And sometimes business owners, they don’t they grown the company, it’s it’s working out, but they don’t know where to go next. And also knowing knowing their books, allows them and this is really, this is really cool. They’re looking at their books, and they’re like, okay, I actually have the bandwidth to support two more clients or bring in three more claims. So that’s going to be my goal for this quarter. Make sure that I I increased by a by three more clients, it depends on what the services that they are providing. And so if he, even if they don’t have clear goals, having their books, and if you can measure it, you can attain it. So you can so by looking at their books, they are saying, okay, we are it’s feasible and realistic. And it’s a great goal to just grow by, by this percentage in the next month. And this is how we’re going to do it. So eat allows them It gives them a clear path to where they are going to go. If they don’t necessarily have a set goal in mind.
Yeah, right on right on.
Krisstina Wise [34:23]
So let’s switch gears a little bit. Let’s just talk a little bit about the three main financial statements and why like what, what each of these financial statements tell us basically, what we’re looking for the narrative I love money is narrative, not numbers. The numbers tell a story. So I’d like to I mean, I love being my books is to me many times it’s like reading a novel, in a way because when I’m reading it the story of Whoa, this is how my business is doing because my business is a story. We help people I pay people, we invent new products and services. We have, we have All these it’s like an orchestra of different things going on. So it’s like music or narrative that that being in my books allows me to read like a book. So let’s talk about that. And in terms of what do each of these financial statements basically tell us? You know, if we’re like reading it, what is it tell us? And then how did they How did they integrate?
Mercedes Gomez [35:26]
Sure. So, um, let me know if I get too geeky accounting. But so we have our income statement, which shows you mostly your revenue expenses, and we think that we are going to have our aim, our revenue is going to show us our different streams of income, whether you are providing one type of service or product or multiple ones. And then we are going to have right underneath our cost of goods sold or cost of service sold. So it’s that they wrecked in expenses, a related to those services you’re providing. And those are going to be variable, if they are going to go up and down depending on the in the quantity of a of the order that you’ve been given. And that those two numbers are going to get us our gross profit, right. And then from our gross profit, we’re going to be able to deduct our operational expenses, those expenses that no matter what we have to pay, which are those memberships in that technology pack or electricity, internet or whatnot, and then we’re going to arrive to an I’m trying to keep it simple, and then we’re going to arrive to our net income or net loss in this number is going to move into the balance sheet at the end of the year. So that’s where the balance, so these income statement is going to help us see our operations for a specific type a period. So whenever you business owners are a being provided an income statement from your accountant, you’ll see at the very top that date, or the period that these income statements for, and you can ask your accountant to provide you or I would like to see my statement of operations for the last month instead of the quarter. And or I want to see it compare month to month and see how it’s being moved flowing. So once we have that net income, or net loss, it’s going to go into our balance sheet. So in our balance sheet, we have our assets, liability and equity, and in assets, and in assets, we’re going to have all those different types of in a equipment, land, a land, buildings, anything we own, that, in a sense, also provides us more income. So it could be that you are that you own an office, you own enough, you own perhaps a floor in an office building and you’re able to rent out a an an office within that floor. So that office, the price of that office is going to be sitting in your balance sheet. It’s going to be sheet sitting in your balance sheet and any income you get from that is going to be in your income statement. So now we have our on our assets and within our assets there is really a an and contra asset account that works to offset it, which is depreciation. And depreciation is a kind of an expense in a sense, but it allows us to over time a reduce the assets like paper wise because the asset is not going anywhere, but reduce our our asset value in our books. So depreciation is a it’s one of those items that is gonna go away once we go into our cash flows. So we’re we’re taking on our assets and our depreciation within that asset section of the balance sheet. Then we and within the assets we also have our accounts receivable, which are those items that a our customers owe to us. And this is an A if you are not if you are not in
a if you haven’t been educated on accounting and you’re not looking at your books, many many business owners have trouble understanding what our accounts receivable and accounts payable. So when we have accounts receivable is really what We have provided sales on credit. So our customers always that money. And it’s up to us to provide a credit policy based on our based on the risk that we are willing to take as business owners. So we’ll say yes to our customers, we are willing to provide you with credit, however, you will have to pay us within this specific period, because that’s how that’s, that’s what we’re gonna support our own business to stay on track, right. And then we move into liabilities, and then liabilities are going to be those including accounts payable, which is what we owe our vendors, our suppliers, and what we might owe the bank if we’ve taken out any loans. And then we’re going to have our equity, which is made up of those revenues and expenses that we talked about before, over time. And that’s where we’re going to see our retained earnings, which is our fun, where we are going to be accumulating money over the years, as we produce a net income on a yearly basis. So really, what our balance sheet shows us is our final financial position at a specific period in a specific day in time. So you are going to draw your balance sheet, your your accountant might provide you your balance sheet as of December 31. A the end of these last year 2019. But on an ongoing basis, just to see what’s your cash position, currently at the bank, in your assets, or see what are the list of assets that you own, you might draw your, you might want to look at your balance sheet, as of today. So that is what that’s going to help you learn about what’s your financial position at a specific day in time. And then we move into our statement of cash flows. And really the statement of cash flows kind of gives up all the receivables, payables, it only focuses on that, on that on the flow of cash. So that the statement of cash flows is if you look at it is going to be divided in three section is going to give you your cash flow from operating activities, which are the activities that you are in, that are the core of your business, it’s going to have cash flows from investing activities, which is a what if you’re if you have extra income, A at the end of a specific period, and you want to go and invest it somewhere else. This is where you’re gonna be able to track how much money you are, how much cash you’ve made from those operations. And then we have cash flows from financing activities. So any money that you’ve borrowed, how much cash has come from there. And adding all these three sections up, we’re going to have our cash flows for that period that we’re looking at usually that year, because that’s what the accountant provides the day when, when they, when they do your taxes they provide you with without in balance sheet as of the end of the year, the statement of cash flow if they provide that, but they might might give it to you for that for that year that went by and we’re we’re back that cash inflows and outflows for those three activities. And it’s really important for him for business owners to look at the cash flow because we eat strips of that, that depreciation and it strips off anything that doesn’t affect your cash position through that period of time that we’re looking at. So those are the main ones.
Krisstina Wise [44:07]
Thank you. And you did a really excellent job of describing those to really give a very clear picture without being too much into the weeds. So the what’s important too about cash flow is that, for example, like in the business mind, for example, where I have monthly payment plans is that if somebody they make one payment, but my accounts receivable is for all future payments, but where it can get confusing is that if I’m sure if I’m looking at my sales, my sales will be for the total amount but so if I’m really looking if I’m not managing my cash for looking at cash flow, I’m thinking I’m making a lot more money this month than I really am so then it’s really easy to get in a loss or think like how am I not making money is because we’re not managing really expenses according to cash in and cash out or not saying hey, there’s going to be a big expense here that’s coming up and insurance payment or Something, but that’s where it’s just understanding. These are you know, we don’t have to be rocket, we don’t have to be accountants, but to understand kind of the basic reasons why we look at these statements just to help us manage money and to really get a good accurate look at our position.
Mercedes Gomez [45:16]
Yeah, the idea is not that as a business owner, you have to become a bookkeeper. Because there is a double entry system that accountants are taught to be able to enter the information in your books. What What is a really that’s the role of your accountant, but that your role as a business owner is to know what information you need to make the best decisions and know where to find it. And a, and also, as you learn what information you need, and you start tracking it over time, then you start learning what come comes into play to affect those numbers. And then you start making a more savvy decisions to affect those numbers in a positive way.
Krisstina Wise [46:01]
Yeah, right on, right on, right on. I love this. Anyway, so just a little segue move a different direction here. And I’ve never done this before. Because when I’m interviewing, I’m just, it’s never about me, it’s always about the information provided by the guest. In this though, where I’d love to go for the first time ever, is obviously you’re a very savvy CPA with incredible experience from like you said, You work for the big four and that type of position, you’ve worked for big corporation, you’ve worked with, you know, a large, small business and you’ve worked with micro business owners, you really have done the full gamut from, you know, from one side of the spectrum to the other, what an incredible amount of experience just pointed view, from everything you’ve seen, that’s really embodied the way you can see everything now, which is very uncommon, is something I really, really admire and value about you and what makes you different distinct from most other CPAs out there. Anyway, but with that vast background, you’re you’ve you originally went through my money class curves, and you went through the your wife’s money certified coach, and then you went through curves for business, which are all my different my different money, schools and certifications. Can you share about everybody listening? Like So what are some of the things you’ve learned maybe in each one of these at least, you know, the the curves and the curves for business? Even coming with all that background of experience? What are some of the things you’ve learned that was missing awareness, even if somebody so schooled in money, was still missing some awareness? So money awareness?
Mercedes Gomez [47:46]
For sure. Um, I, I think that for me, it opened up another perspective on how to look at money, because like you said, I’ve been trained in money for a long time now. And that what they don’t teach you in school is really looking at your ad, and also your energy on how you’re looking at your money. Like with which blocks are you coming when you sit down to look at your money, where it is because you were afraid to look at it where it is because you don’t believe you can make more. And that a that mindset piece of how to look at money. A it was, it was a great tool to add to my services. Because I started it became more clear of how when I was talking to business owners, the words they were saying the the the mentality that where they were coming with a with to look at their numbers was already setting them back. So that was a that was a really a like eye opening experience. And with that, also, with all my training in accounting and looking at businesses, I never really had been educated on how to run my own personal, a Mercedes balance sheet income statement, even though I had been looking at it, but it made it even stronger. It even made it stronger to look at my household as a business as well. And also have to identify what are the assets, the liabilities of my partnership with my boyfriend of my a of my company, Mercedes, GM is personal. So in it really brought to me attention to that personal side of things. Not only business but how we are in one area of our lives. We are in all our areas of our life. So it made me think about how a, I think my education was lacking on that side of, of money, personal and really looking at mindset. And it just made my, my, my encounters with clients more powerful because I was able to support them on that area as well and see what was coming up for them in their own experience and journey.
Krisstina Wise [50:29]
Yeah, thank you. Awesome. And how valuable Do you think it is for most people to go through this type of programming and learning and being educated about money.
Mercedes Gomez [50:43]
I mean, it’s really, it’s amazing, because it pays for itself really, in I think, clients start finding money a, where they thought there was, there was none left. And they start either end, it’s not about and I, this is why I love, I love your philosophy, because it’s not about a just putting yourself into this strict structure and, and saying no to this and no to that, and you kind of take the joy out of life. And it’s the idea of being present for yourself for your finances, and knowing where you’re at. And it’s not. And that’s the whole idea of doing curves, and how I work with my clients is really making sure that they are feeling safe. And they are feeling that it’s no judgement, like, we’ve all made great decisions, and we’ve all made decisions that we want to correct. So it’s the idea of feeling comfortable, where understanding where learning and there is so much room for improvement, really. So there is a lot of value in the sense that he we find areas where we we don’t want to be spending or wasting money in certain things anymore. They realize they’re just a there’s also alternatives ways, alternative ways to get rid of certain loans and debt that they hadn’t seen before. So they’re able to relieve some stress of their back and, and really find that mind space to be there for other areas in their lives. So because once your needs are covered, and money being one of them, then you can be more free to be your your own understanding your own power in other areas of your life. And that’s really what I love. And this is where all my journey has taken me enjoying that work one on one with clients and really learning about theirs their story and a what brought them to where they are today and what how to support them to continue improving just like you and I continue every year like continue to reinvent ourselves and, and continue to grow.
Krisstina Wise [53:14]
I love that. Well let’s kind of final close here. So kind of the big announcement is we’re going into business together with wishing to help micro business owners be more savvy with their books and bookkeeping and CPA financial services. So do you just want to share very quickly, just what that looks like. And we’ll be giving a lot more information as we as we launch this here a little bit later in the year.
Mercedes Gomez [53:46]
For sure. I’m truly excited about this partnership because as I’ve been working with a with wealthy wealthy clients and clients from from my intentional health and wealth company, a, I see the same journey is that idea of Okay, a I’ve learned all these principles and I’m working with with me, they’re working with me to implement them. Now I need a bookkeeper to help me support that entry word that data entry work and to help me a pull out the numbers and read them on a regular basis and really practice makes makes perfect for all those of you who are learning about what an income statement is, what a balance sheet is what a statement of cash flow. It’s it really helps to have someone to, to talk about it with and be able to, to just throw ideas on how we can impact those numbers and how we can make them better. So be it was really or like an organic, a decision where all our clients were really requesting please, please they recommend me A good bookkeeper that’s gonna be able to answer my questions and he’s just not gonna say we’ll talk in two weeks a figure it out until then. And so I’m really excited about about providing the service and complementing not only that coaching with, but also with that support and making sure everyone’s everyone can be relaxed about making about their numbers being accurate and numbers being what they need to see.
Krisstina Wise [55:31]
Yeah, so it’s going through getting bookkeeper help by, at the same time being educated and learning and, and being in this process and that everything that we’ve discussed so I’m super excited about this about our wife’s money, bookkeeping and, and CPA services that that we want to offer. Because like with anything, I mean, there’s a big difference between one bookkeeper and another bookkeeper and one CPA and another CPA.
Mercedes Gomez [56:02]
Yeah, and I was I told you that I was, I was talking, I mean, clients come to me, and they asked me for a great bookkeeper. And I asked around, and I say, oh, let me find out who, who is good at Who can I recommend? Even my friends at CPA firms were like, I have these bookkeepers. But I mean, they’re not 100% reliable, these, these ones cause this problem and this one has this problem. But I mean, is the best I could find, and I was like, No way like we have that we have to be able to provide a better a better service. And and so here we are, and seeing where we’re our clients take us.
Krisstina Wise [56:47]
I love it. All right, well, we’re gonna close up with one question that I ask every guest and is to do a little myth busting. From your point of view, what is one of the biggest myths out there kind of lack of awareness or miss when it comes to bookkeeping, accounting, you know, everything that we’ve talked about.
Mercedes Gomez [57:08]
Um, so a big myth is that it’s hard. And it’s hard to understand. And then it’s not for you, your expertise might be marketing, your expertise might be health. If it is attainable for everybody, because it supports everyone’s operations, so just gives you that extra edge to provide business services and like any learning it, it starts from within. So it’s important for business owners to go within their companies and look at that off where their company’s in stands, not only their business company, but also their household company. So definitely, a it’s easier than you think.
Krisstina Wise [58:07]
That’s so well said. Perfect, perfect, perfect. And I love the going within like we have to go within ourselves to get the answers. We need to go within our books to get those answers so perfectly, said Mercedes, I so adore you. I’m so grateful that our paths crossed I look forward to our ventures moving forward and just a big public. Thank you for everything that you do for me, for wealthy, wealthy and for all of our clients and friends.
Mercedes Gomez [58:32]
Thank you so much. It’s been an honor to be here. And I wish you much success and health and everyone who’s listening. Thank you so much.
Krisstina Wise [58:44]
If you enjoyed today’s show, there are a few things you can do as a way to say thanks. First, simply hit the subscribe button to the wealthy, wealthy podcast. By doing so it helps both of us. You’ll never miss an episode and it helps me and my radians. Second, if you’re so ambitious, please leave a review while you’re at it. Third, just keep doing what you’re doing and continue to share the wealthy wealthy podcast with your tribe of friends and colleagues. On another note, although you likely listen to the podcast one remote, keep in mind that there are links to the guests and their work in the show notes that you can find at WWE podcast.com. You can also find a WWE podcast calm the latest information on my upcoming events and other things I’m creating to serve you in our mutual quest to live a wealthy wealthy life. Thank you so much for listening. See you next time.
What We Covered
[1:57] Who is Mercedes Gomez?
[12:10] What are some of the biggest mistakes that you are seeing small business owners make?
[21:45] What might encourage a business owner to be more invested into knowing their numbers?
[28:15] What are some of the hidden gems in reports that people are often overlooking?
[34:27] Let’s talk about the three main financial statements and the narrative they create.
[44:30] it’s about being able to translate your reports not necessarily becoming an accountant yourself.
[47:00] You have gone through three of my programs now. Your knowledge of money runs the gamut of small micro-businesses all the way up to the big four and lots in between. What have been some of your biggest takeaways?
[50:30] How valuable do you think it is for people to go through this training?
[53:19] We are launching a program together. Tell them a little bit more about us going into business together.
[56:50] Bust a myth for us.
I wanted to search for that balance, where health and wealth would be combined, where we can be successful in our careers, but we can also take good care of our of our lives.
“I think that there’s this mindset that this is harder than it really is, would you agree that there’s different You don’t have to be a CPA, we don’t have to abdicate these things that really tracking the money.”
“I never really had been educated on how to run my own personal, a Mercedes balance sheet income statement, even though I had been looking at it, but it made it even stronger. It even made it stronger to look at my household as a business as well.”
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